The EBA has published its
final report setting out the formula that creditors will be
required to use when calculating the benchmark rate under Annex II
to the Mortgage Credit Directive (2014/17/EU).
Under certain circumstances the Mortgage Credit Directive
requires creditors to use a benchmark rate specified by the EBA for
the illustrative examples in the European Standardized Information
Sheet (ESIS) for variable rate mortgages (specifically, the annual
percentage rate of charge (APRC) and the maximum installment
amount). This is intended to help consumers compare the
characteristics of credit products.
Instead of publishing a specific pan-European rate the EBA has
produced a formula for calculating the appropriate rate which takes
into account national circumstances. The EBA formula includes an
underlying rate specific to each member state (that is, the
European Central Bank (ECB) rate for Eurozone countries and the
national central bank rate for non-Eurozone
